1Q 2018 Strategy Funds

The Good, the Bad and the Ugly

While there are, as ever, many factors that may destabilise global markets in coming months, an inflexion point on North Korea geopolitical risk may be reached by 1Q 2018. We share our thoughts on the possible scenarios on this issue and strategies under the respective situations.

The Good

The Bad

The Ugly

Diplomatic peaceful resolution (Probability 30%)

Old-fashioned deterrence (Probability 40%)

War(Probability 30%)

The US engages in negotiations with North Korea, with/without China, Japan, South Korea and Russia.
North Korea agrees to terminate its nuclear and missile capabilities.
In return, the world would offer the easing of sanctions and other incentives.

This is similar to cold war era. North Korea possesses nuclear weapon by 1Q 2018.
Trump has argued in the past that South Korea and Japan should arm themselves with nuclear weapons.
Tensions will rise among China, South Korea and Japan.

The US takes massive military action against North Korea, destroying its known nuclear, missile, and military infrastructure.
As no one can be sure that all weapons can be eliminated instantly, the North could still launch limited but devastating attacks against South Korea, Japan and US bases.

Disclaimer

This compilation is prepared by Phillip Mutual Berhad in its capacity as an institutional unit trust agent for specific Funds. You are advised to read and understand the relevant prospectus for the Funds. Such prospectus has been registered with the Securities Commission which takes no responsibility for its contents and is obtainable at any of our offices, website and authorised agents. You should consider the fees and charges involved and consult your financial adviser if you are in doubt about any feature or nature of the funds. The prices of units and distribution payable if any may go down as well as up and past performance of the fund is no guarantee for its future performance. Any issue of units to which the prospectus relates will only be made on receipt of the application form referred to in and accompanying the prospectus.
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